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Baum v. Investors Diversified Services Inc.

April 18, 1969

BERNARD M. BAUM AND DANIEL S. SHULMAN
v.
INVESTORS DIVERSIFIED SERVICES, INC.



Kiley, Fairchild and Kerner, Circuit Judges.

Author: Kiley

KILEY, Circuit Judge.

This is a class action seeking treble damages for alleged unlawful price discrimination in violation of Sec. 2(a) of the Clayton Act, as amended by the Robinson-Patman Act, 15 U.S.C. ยง 13(a). The district court dismissed the complaint for failure to state a claim upon which relief can be granted. Rule 12 (b)(6), FED. R. CIV. P. We affirm.

The well pleaded allegations of the complaint are admitted: Defendant, Investors Diversified Services, Inc. (IDS) acts as the sole investment adviser and exclusive underwriter and distributor of five open-end investment companies, collectively known as the "Investors Group" mutual fund. It has established a schedule of "cumulative quantity discounts" to its customers when selling Investors Group mutual fund shares.

The cumulative quantity discount practice is a sales load,*fn1 or commission, schedule, available to everyone, whereby lower sales loads are charged to large purchasers or holders of large blocks of Investors Group shares. The criterion for determining the lower rates is not merely the size of the block which an investor purchases at one time, but rather the size which he has accumulated. For example, a purchaser of a $500,000 block is charged the same commission rate as a purchaser of a $1,000 block who has already purchased an aggregate of $499,000 shares of Investors Group funds.

The sales load schedule established by IDS is:

Present Quantity Dis- Former Quantity Dis-

count Represented As count Represented As

Sales Charges From Sales Charges From

Per Cent Of Public Per Cent Of Public

Aggregate Amount of Offering Price Since Offering To October

Purchases October 15, 1964 15, 1964

To $14,999 8% ...


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